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Industry, payer and analyst experts agree: Pharmaceutical
and biotechnology companies must incorporate pharmacoeconomic
value into development and brand strategy decisions to remain
competitive
NEW YORK, June 15, 2005—Pharmaceutical
and biotechnology companies are putting their revenues at
risk by failing to appropriately address the healthcare
value needs of private and public managed care payers, according
to the expert panel at American Management Association’s
(AMA) Webcast, Establishing Healthcare Value: New Tactics
for Brand Survival and Corporate Competitiveness in
May.
With increasing healthcare costs on one side and employers
rejecting continued insurance premium increases on the other,
managed care organizations (MCOs) are being squeezed, having
little choice but to find ways to utilize healthcare resources
more efficiently than ever. According to Richard Fry, Director
of Programs at The Foundation for Managed Care Pharmacy
(FMCP), many MCOs are controlling rising pharmaceutical
and biologicals costs by adding to formularies only those
therapeutics that manufacturers can prove deliver improved
patient healthcare outcomes while favorably impacting overall
treatment costs relative to the standard of care. This outcomes-based
access (OBA) system requires that manufacturers prove to
payers that their products offer compelling pharmacoeconomic
value, or face coverage rejection.
“Using the best available published and unpublished
clinical and economic data, including cost-effectiveness
analyses and pharmacoeconomic models, MCOs may reject for
coverage and reimbursement clinically effective therapies
that cannot demonstrate meaningful healthcare value, compared
to available alternative treatments,” Fry said. While
payers are willing to pay for new therapies that come at
a greater acquisition cost, the new interventions must deliver
superior patient outcomes, such that payers can justify
their overall financial burden on the healthcare system
in comparison to the current standard of care.
The public sector is lagging behind the private sector
in adopting an evidence-based medicine approach, according
to Joan Henneberry, Senior Vice President at Policy Studies
Inc., consultants to health, human services and justice
organizations, and former director of the Health Policy
Studies Division, Center for Best Practices at the National
Governors Association. She pointed out that Medicare faces
a major funding crisis that at some point is likely to require
an approach that utilizes limited healthcare resources more
efficiently. “Employers are really paving the way
advocating for value in purchasing, but I do think that
the public sector will follow the private sector down the
road,” Henneberry said.
Value-based coverage evaluations must be taken into account
early. Seamus Fernandez, Vice President and equity analyst
at SG Cowen & Co., a leading healthcare investment bank,
indicated that outcomes-based access requires manufacturers
to be more aggressive in their development targets. He indicated
that it is no longer possible for manufacturers to build
development strategies around reformulations and “me-too”
products because payers will not pay for them. “Manufacturers
need to seek aggressive targets in major disease areas that
change the standard of care, as well as target under served
disease areas,” Fernandez said. He indicated that
Wall Street increasingly is valuing pharma and biotech companies
based on assessments of companies’ product development
strategies, favorably valuing those that have meaningfully
incorporated pharmacoeconomic value as a key development
goal alongside safety and efficacy.
According to Michael Russo, Partner at The Bruckner Group,
strategy and research consultants for the pharmaceutical
and biotechnology industries, the U.S. healthcare system
has not adequately developed the strategic skills and insights
required to address outcomes and value-based decision making.
“Defining and developing value in a specific disease
area is a tricky business, requiring a change in market
orientation and experience in such evaluations.” Russo
believes that “most pharma and biotech companies are
still struggling to understand how outcomes-based access
impacts their development and marketing strategies. Many
do not even have a US managed-markets group, and for those
that do, it is under staffed, and under funded. Those relatively
few pharma and biotech companies that are responding effectively
to OBA have strong executive leadership that recognizes
that pharmacoeconomic focus is mission-critical, across
the entire enterprise, not just in a specialty outcomes
research group.”
Russo further indicated that while some manufacturers have
responded to OBA by focusing primarily on product pricing
and launch strategies that include additional services,
a proper response to OBA requires activities in all aspects
of the product life cycle. Those companies that recognize
this reality and respond accordingly will be the next generation
of successful pharma and biotech companies.
AMA and The Bruckner Group offer training programs that
address major marketing, pharmacoeconomic and sales challenges
currently faced by pharmaceutical and biotechnology manufacturers.
The programs are divided into three broad categories: basic
skills training in pharmacoeconomics, market research and
analytical techniques; applying fundamentals to the sales,
marketing and branding challenges in the pharma industry,
including strategic marketing efforts and physician detailing;
and overviews of the pharmaceutical industry and drug development
process.
About AMA
American Management Association is the world’s leading
membership-based management development organization. For
80 years, it has provided valuable and practical action-oriented
learning programs to people at all levels, in all industries,
from companies and agencies of all sizes. More than 500,000
AMA customers and members a year learn new skills and behaviors,
gain more confidence, advance their careers and contribute
to the success of their organizations through a wide range
of AMA seminars, conferences and executive forums, as well
as through AMA books and publications, research and print
and online self-study courses.
About The Bruckner Group
The Bruckner Group Inc. (BGI), located just outside of Boston
in Wakefield, Massachusetts, is a strategy and research
firm exclusively serving the pharmaceutical and biotechnology
industries. BGI operates at the intersection of clinical
medicine and competitive strategy, using highly quantitative
and data-intensive approaches to develop brand strategies
and perform research and analysis. BGI’s singular
goal is to develop solutions that maximize the revenue generation
of clients’ therapeutic innovations. BGI is the leading
expert in outcomes-based access (OBA). BGI’s OBA practice
helps manufacturers maximize product revenues by properly
developing, marketing and building competitive advantage
on the basis of the comparative healthcare and pharmacoeconomic
value of therapeutics. For more information, visit www.brucknergroup.com.
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